8 Pages Posted: 29 Feb 2012
Date Written: February 28, 2012
We construct a simple equilibrium search model in which workers accumulate information about previously met employment contacts. We term the latter search capital. Here search capital (partially) insures workers against adverse shocks. The model provides a theory of job-to-job transitions that are associated with voluntary or involuntary mobility and with wage rises or wage cuts. It also shows why low wage and younger workers are associated with a higher probability of becoming unemployed.
Keywords: search capital, turnover, wage cuts
JEL Classification: J620, J630, J640
Suggested Citation: Suggested Citation